Large Commercial Wind Exemption and Alternative Taxes (South Dakota)
Last modified on February 12, 2015.
Financial Incentive Program
|Name||Large Commercial Wind Exemption and Alternative Taxes|
|Incentive Type||Property Tax Incentive|
|Energy Category||Renewable Energy Incentive Programs|
|Amount||Alternative tax assessment method: 3/kW of capacity and 2% of the gross receipts of the wind farm. Partial rebate available for cost of transmission line and collector system equipment located in SD and serving an eligible facility.|
|Eligible System Size||Wind farms 5 MW or greater|
|Start Date||7/01/2007 (facility date of operation)|
|Program Administrator||S.D. Department of Revenue and Regulation|
|References||DSIREDatabase of State Incentives for Renewables and Efficiency|
In South Dakota, wind farms constructed after July 1, 2007, are subject to an alternative taxation calculation in lieu of all taxes on real and personal property levied by the state, counties, municipalities, school districts, and other political subdivisions. The definition of "wind farm" includes only facilities producing electricity for commercial sale that have a minimum capacity of 5 megawatts (MW). All property used or constructed to interconnect individual wind turbines within a wind farm into a common project, termed the "collector system," is eligible for the exemption and alternative taxation.
The alternative taxation method has two components. The first component is an annual tax equal to $3 per kilowatt (kW) of capacity of the wind farm, prorated according to when the wind farm begins operation during the first calendar year. The second component is a 2% annual tax on the gross receipts of the wind farm. The gross receipts are calculated as the number of kilowatt-hours (kWh) produced multiplied by a base electricity rate of $0.0475 per kWh in 2008, with the base rate increasing by 2.5% annually thereafter.
A partial rebate of the taxes paid under this formula is available for the construction of transmission lines in South Dakota that serve an eligible facility. The total maximum rebate is 50% of the combined cost of the transmission lines and wind farm collector system. The maximum rebate in one year is 90% of the gross receipts tax for the first 5 years and 50% of the gross receipts tax for the next 5 years. Up to 80% of the rebate may be issued in the form of a tax credit in lieu of full payment of the gross receipts tax.
The money generated by the alternative taxation method described above will be deposited into the state's wind energy tax fund. All of the receipts from the capacity tax and 20% of the gross receipts tax will be redistributed back to the county treasurer of the county (or counties) where the wind farm is located before May of each year. The funds must be distributed among the school districts, the county, and the organized townships.
|Contact Name||Wendy Semmler|
|Department||S.D. Department of Revenue and Regulation|
|Division||Property and Special Tax Division|
|Address||445 East Capitol Avenue|
|Place||Pierre, South Dakota|
|Phone 2||(605) 773-6729|
Authorities (Please contact the if there are any file problems.)
|Authority 1:||SDCL § 10-35-16 et seq. (subsequently amended)|
|Date Effective||7/01/2007 (facility date of operation)|
- Incentive and policy data are reviewed and approved by the N.C. Solar Center's DSIRE project staff.